AR Invoice Factoring for Small Business
Stop waiting on customer payments and access your working capital today.
Overview
Invoice factoring lets you turn outstanding B2B invoices into immediate cash. Sell your unpaid invoices to Big Think Capital and receive up to 90% of the invoice value within 24 to 48 hours. When your customer pays, you receive the remaining balance minus a small factor fee.
Because factoring is a sale of receivables rather than a loan, there's no debt added to your balance sheet. Underwriting focuses on the creditworthiness of your customers, which makes factoring accessible to businesses that might not qualify for traditional financing.
Factoring is one of the oldest forms of commercial finance — older than banks — and it works because it solves a specific structural problem in B2B commerce: large customers pay on net-30, net-60, or net-90 terms, while suppliers need cash to make payroll, buy more inventory, and grow. Factoring closes that gap. If your business has $50K+ per month in invoiced B2B receivables to creditworthy customers, factoring scales linearly with your sales without ever requiring a new application.
Pricing is expressed as a factor fee (sometimes called a discount fee) — typically 1% to 5% of invoice value depending on customer credit, average invoice size, total monthly volume, and how long invoices typically take to pay. Many programs charge a tiered fee that increases the longer an invoice goes unpaid. There are two structural flavors: recourse factoring (you take back unpaid invoices after 90 days) and non-recourse factoring (the factor absorbs credit losses, usually at a higher fee). Rates and terms vary by lender and borrower profile.
A common archetype: a staffing agency invoices a Fortune 500 client $200,000 every two weeks but waits 60 days to get paid. Their payroll runs weekly. Factoring advances 90% ($180,000) within 48 hours of each invoice — covering payroll, growth, and reinvestment — and the agency simply waits for the customer to pay. The factor handles collections, deposits the residual when the customer pays, and the cycle repeats. Compare with a business line of credit or working capital for your situation. Reach an advisor at /contact.
Benefits
Not a Loan
Factoring is a sale of receivables — no debt on your balance sheet and no fixed monthly payments to manage.
24–48 Hour Funding
Once your account is set up, future invoices fund within a day or two of submission.
Scales with Revenue
More invoices means more available capital. Factoring grows automatically as your sales grow.
Who typically qualifies for invoice factoring
- Personal credit score: not a primary factor (factors care about your customers' credit)
- At least 3 months in business
- B2B or B2G invoices (selling to other businesses or government — not consumers)
- Customers with established commercial credit (Fortune-rated buyers ideal)
- Minimum $25,000–$50,000 per month in factorable invoices
- Clean invoices — no progress billing, contra accounts, or pre-existing UCC liens on AR
- Documentation: customer list, AR aging report, sample invoices, articles of organization
How invoice factoring works
Apply and set up the account
Submit your customer list, AR aging, and sample invoices. The factor underwrites your customers — not you — to set advance rates and approved buyers.
Invoice your customer normally
Continue invoicing your customers on your existing terms. A small notification language is typically added so they pay the factor's lockbox.
Submit invoices for funding
Upload each invoice to the factor. Verification of delivery / acceptance happens quickly, and the advance funds in 24–48 hours.
Customer pays the factor
Your customer pays the invoice to the factor's lockbox on their normal net-30/60/90 cycle. The factor handles collections and tracking.
Receive the residual
When the customer pays, you receive the remaining balance (typically 10%) minus the factor fee. The cycle repeats with every new invoice.
Where factoring fits best
Staffing & temp agencies
Weekly payroll against net-30 or net-60 client invoicing is the textbook factoring use case. The math nearly always works.
Trucking & freight
Brokers and shippers commonly pay carriers on 30+ day cycles. Factoring (often with fuel-card programs) keeps trucks moving without waiting for payment.
Manufacturers & wholesalers
When big retail buyers pay net-60 or net-90, factoring funds the next production cycle while you wait for the receivable.
Government contractors
Federal, state, and municipal payment timelines can stretch 60–120 days. Factoring against government receivables (often non-recourse) bridges the gap.
Construction subcontractors
Progress billing and lien waivers make construction factoring nuanced, but specialized construction factors do this every day for qualified subs.
Service providers with enterprise clients
Marketing agencies, IT services, consultants — anyone billing enterprises on net-30+ can use factoring to smooth cash flow.
How factoring compares
Factoring scales without a fixed limit
A line of credit is capped — once you hit your limit, you're done. Factoring scales linearly with sales: more invoices, more capital, automatically.
Factoring is cheaper for AR-heavy businesses
A 2% factor fee on a net-30 invoice is roughly 24% annualized — but you only pay it on what you factor. Working capital often costs more per dollar.
Factoring funds when banks won't
Banks underwrite your credit. Factors underwrite your customers' credit. If your customers are creditworthy but you are not (yet), factoring works when bank loans don't.
Frequently Asked Questions
Quick answers to the questions we hear most often.
Will my customers know I'm factoring?+
How much does invoice factoring cost?+
Can I factor just some of my invoices?+
What's the difference between recourse and non-recourse factoring?+
Can a brand-new business factor invoices?+
Is factoring right for B2C businesses?+
Ready to apply for Invoice Factoring?
Get matched in minutes. No hard credit pull, no obligation.
- Approvals in as little as 24 hours
- Funding from $10K to $10M+
- No hard credit pull to apply
- Dedicated funding expert assigned to you